Unilever to resume buying CPO if Sinar Mas cleared

Reuters 7 Apr 10;

JAKARTA, April 7 (Reuters) - Unilever (ULVR.L) (UNc.AS), the world's top palm oil buyer, will resume palm oil purchases from Indonesia's PT SMART (SMAR.JK) if independent auditors clear the firm over alleged forest destruction, a company spokesman said on Wednesday.

Unilever, which uses palm oil in such products as Dove soap and Ben & Jerry ice cream, cancelled its annual 20 million pound ($32 million) contract with PT SMART, which is part of Sinar Mas, in December unless the group could provide proof that none of its plantations were contributing to the destruction of rain forests.

"We will resume buying palm oil from Sinar Mas if studies by independent auditors show that Greenpeace's allegation against Sinar Mas is false," said Sancoyo Antarikso, corporate secretary of PT Unilever Indonesia Tbk (UNVR.JK).

Greenpeace alleges that Sinar Mas, Indonesia's biggest palm oil producer and the second biggest in the world, has been responsible for widespread deforestation and peatland clearance, practices which release vast amounts of carbon dioxide.

Unilever could also resume buying palm oil from Sinar Mas, even if the audit supported Greenpeace's allegations, if Sinar Mas showed it was addressing the environmental complaints, Antarikso said.

Unilever consumes around 1.9 million tonnes of palm oil each year and has pledged to buy only from certified sustainable plantations from 2015, while around 90 percent of worldwide supply comes from Indonesia and neighbouring Malaysia.

PT SMART and PT Unilever Indonesia agreed to appoint two independent auditors -- Netherland-based Control Union Certification (CUC) and British Standard institute -- early this month to investigate the environmental allegations.

The independent auditors were due to begin work on April 20 and complete their study by the end of June, Daud Dharsono, SMART's president director, said.

Other top palm oil buyer Nestle (NESN.VX) had also joined Unilever to stop buying palm oil from Sinar Mas after Greenpeace released a report alleging the planter cleared rainforests.

Agribusiness giant Cargill Inc [CARG.UL] has also recently threatened to remove Sinar Mas as a palm oil supplier over allegations of illegal logging.

Analysts said top palm oil buyers halting supply contracts with Sinar Mas and other planters in the future could limit plantation expansion as global food and fuel demand grows.

But Green campaigners and consumers have turned up the heat on multinationals buying palm oil, saying these companies' palm oil suppliers are responsible for deforestation and peatland clearance.

(Reporting by Yayat Supriatna; Writing by Fitri Wulandari; Editing by Ed Davies)

Unilever Indonesia Says it May Resume Buying Sinar Mas Palm Oil
Arti Ekawati, Jakarta Globe 7 Apr 10;

PT Unilever Indonesia said on Wednesday it would consider resuming purchases of crude palm oil from the Sinar Mas Group after reviewing the conclusions of two studies of the producer’s environmental practices.

“If the [assessment] teams say there was no evidence of deforestation by Smart [PT Sinar Mas Agro Resources and Technology] in producing its CPO, or if there was indeed evidence of deforestation but Smart has already made the necessary improvements, we will consider buying from Smart again,” said Sancoyo Antarikso, corporate secretary and general manager for external relations at Unilever Indonesia, after a meeting with Smart executives at the Ministry of Trade.

Sinar Mas last week announced it had appointed Netherlands-based Control Union Certification and London-based British Standards Institution Group to verify allegations by Greenpeace that Sinar Mas destroyed tropical rainforests to create palm oil plantations.

In an August 2008 report called “Burning up Borneo,” Greenpeace accused Sinar Mas of destroying rainforests, the habitat of orangutans, in the production of crude palm oil. Unilever announced in December that it would stop buying palm oil from the group and Nestle followed suit last month. US food giant Cargill said it would do the same if Greenpeace’s claims prove true.

Sinar Mas has denied the Greenpeace allegations.

Speaking after the meeting at the Trade Ministry, Smart president director Daud Dharsono said the two assessment bodies were expected to complete their work by the end of June.

He added that the bodies were recognized by the Roundtable on Sustainable Palm Oil, a trade body of producers and buyers formed “with the objective of promoting the growth and use of sustainable oil palm products,” according to its Web site.

Greenpeace has said it doubts the assessments will be neutral, according to a Bloomberg report last week.

Deputy Trade Minister Mahendra Siregar said the ministry was facilitating talks between the two companies because crude palm oil is one of the country’s major export commodities.

“The case may not have a significant impact on Sinar Mas but we consider palm oil an important strategic commodity for boosting our economy,” Mahendra said, saying 4 million people were directly employed in the palm oil sector.

Mahendra added that other palm oil producers should learn from Sinar Mas’s experience.

Daud said Unilever, the world’s biggest buyer of crude palm oil, accounted for about 3 percent of Smart’s sales of the commodity, while Nestle made up 0.2 percent.

Verification over forest destruction claims to be completed in June
Mustaqim Adamrah, The Jakarta Post 7 Apr 10;

Publicly listed crude palm oil (CPO) producer PT Sinar Mas Agro Resources and Technology (SMART) expects to have a verification work over forest destruction claims finished by June’s end.

“We have delivered the term of reference (part of the verification work) to the two consulting (firms) … we still need to arrange some details,” SMART president Daud Dharsono told reporters on Wednesday after a meeting with Trade Ministry officials and the Netherlands-based consumer goods producer Unilever executives.

“We hope the verification will complete within the next eight to 12 weeks – by the end of June.”

For the verification, SMART has appointed the Netherlands-based Control Union Certification (CUC) and British Standards Institute Group (BSI) headquartered in London through their representative offices in Kuala Lumpur, Malaysia, and in Singapore, respectively.

Results of the verification are expected to, as SMART says, “clarify” issues raised by environmental non-governmental organization Greenpeace in the latter’s report.

Meanwhile, Unilever Indonesia corporate secretary Sancoyo Antarikso said Unilever would wait for the results before deciding to whether resume buying CPO from SMART or not.

In a 2008 Greenpeace report, the organization indicated that CPO producers, including SMART, had converted peat lands, natural forests and habitats of Indonesia’s indigenous Orangutan into oil palm plantations. The report was later supported by a field investigation and satellite data.